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Sunland Corp. currently has an issued debenture outstanding with Abbra Bank. The note has a principal of $4 million, it was issued at face
Sunland Corp. currently has an issued debenture outstanding with Abbra Bank. The note has a principal of $4 million, it was issued at face value, and interest is payable at 7%. The term of the debenture was 10 years, and it was issued on December 31, 2016. The current market rate for this debenture is 9%. Sunland has been experiencing financial difficulties and has asked Abbra Bank to restructure the note. Both Sunland and Abbra Bank prepare financial statements in accordance with IFRS. It is currently December 31, 2023. For each of the following independent situations related to the above scenario, prepare the journal entries that Sunland and Abbra Bank would make for the restructuring that is described. (a) Your answer is partially correct. Abbra Bank has agreed to accept common shares with a market value of $3.5 million in exchange for relinquishing this note. Assume that the bank had previously recognized a loss on impairment. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. List all debit entries before credit entries.) On the books of Sunland Corporation: Account Titles and Explanation Notes Payable Debit Credit Loss on Impairment Gain on Restructuring of Debt On the books of Abbra Bank: Account Titles and Explanation Debit Credit
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